Study On The Influence From Cross-listing On Corporate Agency Cost

From1980s’, in the context of the economic globalization, the global financial situation has made great changes. The rapid development of national capital markets, institutions and regulations greatly promote the process of financial integration. On this basis, overseas equity financing make a rapid development and many large enterprises choose to overseas markets to seek funding. This behavior has been strong concerned throughout the world by business and academic.Foreign academics for cross-field of study focusing on cross-listed reasons, the business value, impact of capital cost and capital markets after the cross-listing of reactions, and so on. Among them, the research of cross-listing’s reason most mature and comprehensive, they put forward the Market Segmentation Hypothesis, Liquidity Hypothesis, Investor Recognition Hypothesis, etc. The above theory all think cross-listings behavior has a price discovery function It can improve the governance capability of enterprise, solve the market segmentation, reduce information asymmetry, increase the liquidity of stocks, reduce the liquidity risk premium and investors expect remuneration, reduce the financing constraints, and ultimately enable corporate access to low-cost financing, and these makes the company have motivation to cross-listed.About the research of the influence from cross-listing on corporate agency cost, Western scholars’research shows that companies Cross-listed in the investor protection system more perfect, more standardized and more rigorous markets can improve corporate governance, strengthening the protection of minority shareholders, increase the value of companies, reducing agents costs, It’s called a bonding Hypothesis.Inspired by the national policy, some Chinese excellent enterprise race to choose listed in the overseas capital market which is more perfect. But under the influence of geographical, cultural, and political factors, the mainland companies’ main locations of the overseas listed is in Hong Kong, thus "A+H" is our country enterprise cross-listings main form. In July1993, Qingdao Beer successfully listed A+H shares opening prelude to the cross-listing of Chinese enterprises, By31December2010, A total of72companies through "A+H" cross-listings raise funds. Worthy of note is that most of cross-listing companies are the industry leader. Along with the growing number of cross-listing companies, Chinese scholars draw lessons from foreign related research, and conduct a wide range of research domestic companies cross-listed behavior, these studies show that "A+H" cross-listed shares will help ease market segmentation, relaxed corporate financing constraints, lower capital costs, and increase business value. However, the empirical research on whether "A+H" cross-listed can help reduce agency cost; it’s mainly study on the influence from corporate governance features on debt agency cost.In addition, the separation of ownership issues and agent of the company has always been the central problem of the theory of enterprises. It has achieved great development in our country and raised a lot of academic research interests. Initially of delegate agent theory main research Equity agency problems, after1999, La Porta and other scholars found around the world many listed companies’equity structure are relatively concentrate. The company is controlled by the majority shareholder, the controlling shareholders through the pyramid ownership structure, the cross-shareholdings and a stream of many means such as ticket control of a public company. Therefore, the agency problem between controlling shareholders and other stakeholders has become the principal contradiction of corporate governance under the relative concentration of ownership. Chinese scholars’ studies also show that the controlling shareholder and other shareholders’interest differences is also the main contradiction of corporate governance in China, and at present, Chinese equity division reform process is not yet complete, legal protection system and regulatory measures are imperfect, and management level is low. The controlling shareholders and other shareholders’agent problem are more serious. But the research of debt agency cost is relatively few. Especially debt agency cost measure has always been a big controversy.Above, past of about agent theory research most are just for one of above three items agent cost as research object, although a few scholars in the study taking stakes in agency costs and largest shareholder, But the existing research literature did not see considering the above three agency cost. Based on this, the paper will enterprise agency cost subdivided into equity agency cost, big shareholders’ agency cost and debt agency cost. So to make the article study more detailed and accurate, it has certain theoretical meaning on the study of the principal-agent theory.This article has taken a combination of theoretical analysis and empirical analysis of research methods. After a system summary and analysis of the cross-listing and company agency costs’theory, the agency cost will be subdivided into management agency costs and big shareholders agency costs and debt agency cost. Then Combined with cross-listed company in our country’s history and feature assumes that companies cross-listed in our country can reduce the three agency costs.Based on the above assumptions, using a sample of firms from2008to2010that are cross-listed between China and Hong Kong, and then select the company which only issue A shares as paired samples. In the control of the related factors conditions, by regression analyses to test the various assumptions, discover cross-listing does have a certain amount of influence on the company agent cost:First, the company crosses listed in Hong Kong and China can reduce company’s management costs rate and improve company assets turnover, it will also reduce company management agent cost.Second, national securities regulatory departments should learn from developed countries, strengthening supervision over the market, improve the level of enterprise information disclosure.Third, Chinese companies that issued both domestic A shares in mainland China and foreign H shares on the Hong Kong have less interest exchange ratio. It shows that our country’s company cross-listed in securities trading system more robust, information disclosure requirements more strictly market. Full and timely disclosure of information allows the creditor to obtain what they need for more timely and comprehensive company information, remit the information asymmetry between creditors and shareholders, better protect the interest of creditors, reducing the restrictions of the creditors on refinancing of the company, so as to reduce the company’s debt financing difficulty, Made the company’s debt agency costs less. Fourth, with the diversification of cross-listing model, companies can select the appropriate cross-listing model according to the need of company.Based on these findings, this article from the perspective of securities regulators and the Government made several recommendations for reference:First, the securities regulatory departments should speed up the construction and improvement of relevant laws and regulations, enabling cross-listed domestic companies have lows and regulations to abide by.Second, as a growing number of overseas listed companies choose to return to the domestic market, regulators should formulate relevant laws and standards.Third, after the companies listed in overseas’developed capital market, they should be developed by the market supervision mechanism to improve their own management level, Improve the level and quality of information disclosure. Enhance their core competitiveness of enterprises, Expand the influence of Chinese concept stocks.Fourth, with the diversification of cross-listing model, companies can select the appropriate mode according to the need of the companies.Due to Cross-listing history in our country is relatively short, for quantitative and systematic research in this area is very small, the study of agency cost metrics also has been controversial. Because the research of management agency costs and big shareholders agency cost more mature, the research of metrics are also more mature, but there are a few people study on debt agency cost. And our debt markets are not well developed, and very few companies issue bonds, Foreign General metrics is the margin of business refinancing rate and treasury interest rates over the same period, this index is not applicable in our country. So, debt agents cost metrics has been controversial. After in reference to previous related studies, I decided to use the interest expense/(short-term borrowings+long-term borrowing+bonds payable) to replace the company’s refinancing rate. Usually, the one-year Treasury interest rates reflect the national macro-economic conditions; can be used to indicate the market average risk-free interest rate. The margin of them is debt agency cost. Select the interest expense/(short-term borrowings+long-term borrowing+bonds payable)-one year weighted average yields of that year as debt agency cost metric is a major innovation in this article.Despite the international financial crisis slowed the development of capital markets, hinder the pace of national company overseas listing. But international development trend of economic globalization and market integration will not change; from a corporate finance perspective on Chinese cross-listed company studied has a lot of space. Around the impact of cross-listing for the company agent cost, in the future, further research on agents costs can establish a more accurate metrics. In addition, more and more industry in our country will be cross-listing. Later scholars to study the cross-listing companies can by sector.